1

1. SIGNIFICANCE OF THE PROJECT

The aim of this project topic is to find the role of packaging on consumer buying behaviour.

The basic purpose behind it is to find out how such factors act behind the success of

packaging. According to this research I try to find the positive relationship between

independent variable and dependent variables. For collecting the data I had used the

questionnaire.

The significance of the study, its limitations are discussed. The consumer buying behaviour

is dependent variable. The packaging is the most important factor. Packaging elements like

Packaging colour. Background Image, Packaging Material, Font Style, Design of wrapper,

Printed Information and Innovation is taken as predictors.

Due to increasing self-service and changing consumers lifestyle the interest in package as a

tool of sales promotion and stimulator of impulsive buying behaviour is growing

increasingly. So package performs an important role in marketing communications,

especially in the point of sale and could be treated as one of the most important factors

influencing consumers purchase decision. Literature analysis on question under

investigation has shown that there is no agreement on classification of package elements as

well as on research methods of package impact on consumers purchase decision.

By this article we seek to reveal elements of package having the ultimate effect on consumer

choice. Taking into consideration that package could be treated as a set of various elements

communicating different messages to a consumer; the research model was developed and

tested in order to reveal impact of visual and verbal package elements on consumers

purchase decisions.

2

Objective of the Project: Important attribute in the research Convenience, Materials, Aesthetic, Information.

To find out these Attributes affect Consumer Behaviour Significantly.

To find out the priority of consumers towards Packaging.

To find out the demand for after-use Packaging and eco-friendly Packaging.

Is there any significant difference between the Variables as there is change in Products?

To find out the Consumer Attitude towards the new Packaging of Preserved Products.

Is Packaging Influence Consumer to switch from one to another Brand?

Are consumers willing to pay premium prices for better packaging? Hypothesis: Packaging has least influence on consumer buying behaviour.

Packaging only provides information.

Packaging cannot be used as a tool of marketing.

There is no difference in sales if the Packaging of a particular product is being changed.

People do not purchase eco-friendly Packaged products.

3

Methodology: The methodology for the survey on Consumer Behaviour towards Packaging of FMCG

Products is the Questionnaire method where in questionnaire are answered by 50

respondents (including Male and Female respondents) of 4 age groups.

The responses are gathered in a standardized way, so questionnaires are more objective,

certainly more so than interviews. Generally it is relatively quick to collect information

using a questionnaire. However in some situations they can take a long time not only to

design but also to apply and analyse.

Limitations: The only limitation behind this project was that people were not responding as seriously as it

was expected and it is assumed that people have seriously filled the questionnaires for the

exact result.

4

2. INTRODUCTION

JO DIKHTA HAI WOH HI BIKTA HAI

The earlier approach to marketing was simple enough to make sure that the product is

visible - on store shelves and through mass media advertising - and it will more or less sell

itself. With the evolution of modern retail, though, the emphasis is shifting to in-store

displays and promotions - probably also because for the first time, the space for such

initiatives is available.

But manufacturers no longer have the last word on what will happen at the store. "Modern

trade has a significant say in promotions, perhaps because it offers far superior results with a

much faster lead time," says Future Group's Mall.

Cadbury India's Sethi points out that retailer are more

open to brand promotions and displays - including

posters, gondolas and danglers - when manufacturers

back up their ideas with shopper insights. "There will be

a shift from traditional media to increased

communication at the point of purchase," he says.

Initiatives that help grow the category as a whole are

particularly welcome, say analysts, since that boosts the

retailers' revenue. And many FMCG companies are predicting that spends on promotion, in-

store and point of purchase displays will increase significantly from the present 20-30 per

cent share of the marketing budget.

Consumer goods companies need to make several changes in strategy and in attitude, if they

are to achieve the same level of success with organized retail as they have with traditional

formats. Printing barcodes on their products would probably be a good place to start.

5

Meaning: Packaging is the science, art and technology of enclosing or protecting products for

distribution, storage, sale, and use. Packaging also refers to the process of design, evaluation,

and production of packages. Packaging can be described as a coordinated system of

preparing goods for transport, warehousing, logistics, sale, and end use. Packaging contains,

protects, preserves, transports, informs, and sells. In many countries it is fully integrated into

government, business, and institutional, industrial, and personal use.

The wrapping material around a consumer item that serves to contain, identify, describe,

protect, display, promote and otherwise make the product marketable and keep it clean is

said to be Packaging.

Packaging is more than just a product's pretty face. A package design may affect everything

from breakage rates in shipment to whether stores will be willing to stock it. For example,

"display ability" is an important concern. The original slanted-roof metal container used for

Log Cabin Syrup was changed to a design that was easier to stack after grocers became

reluctant to devote the necessary amounts of shelf space to the awkward packages.

6

Other distribution-related packaging considerations include:-

Labelling: It may be required to include certain information on the label of your product when it is distributed in specific ways. For example, labels of food products

sold in retail outlets must contain information about their ingredients and nutritional

value.

Opening: If a product is one that will be distributed in such a way that customers will want to, and should be able to, sample or examine it before buying, the packaging will

have to be easy to open and to reclose. If, on the other hand, the product should not be

opened by anyone other than the purchaser, an over-the-counter medication, for

instance--then the packaging will have to be designed to resist and reveal tampering.

Size: If the product must have to be shipped a long distance to its distribution point, then bulky or heavy packaging may add too much to transportation costs.

Durability: Many products endure rough handling between their production point and their ultimate consumer. If the distribution system can't be relied upon to protect the

product, the packaging will have to do the job.

7

History:

From the very earliest times, humans consumed food where it was found. Families and

villages made or caught what they used. They were also self-sufficient, so there was little

need for packaging of goods, either for storage or transportation. When containers were

needed, nature provided gourds, shells, and leaves. Later, containers were fashioned from

natural materials, such as hollowed logs, woven grasses and animal organs. As ores and

chemical compounds were discovered, metals and pottery were developed, leading to other

packaging forms. Packaging is used for several purposes:

Contain products, defining the amount the consumer will purchase.

Protects products from contamination, from environmental damage and from theft.

Facilitate transportation and storing of products.

Carry information and colourful designs that make attractive displays.

For each product's needs, there are good packaging solutions. Though packages are often

taken for granted, they are the result of many years of innovation. A brief review of the more

popular packaging developments is included in this fact sheet:

Paper and Paper Products: One way of placing packages into categories is to describe them as flexible, semi-flexible, or

rigid. Flexible packaging includes the paper sacks that dog food comes in, the plastic bags

that hold potato chips and the paper or plastic sacks in which we carry home our purchases.

An example of semi-flexible packaging is the paperboard boxes that cereal, many other food

products, small household items, and many toys are packaged in. For many non-food items,

the packaging is made more rigid by formed packing materials that slip inside the box and

hold the product and its accessories or components in place. Forms of rigid packaging

8

include crates, glass bottles, and metal cans. Cloth or paper may be the oldest forms of

flexible packaging.

Glass: Although glass-making began in 7000 B.C. as an offshoot of pottery, it was first

industrialized in Egyptian 1500 B.C. Made from base materials (limestone, soda, sand and

silica), which were in plentiful supply, all ingredients were simply melted together and

moulded while hot. Since that early discovery, the mixing process and the ingredients have

changed very little, but the moulding techniques have progressed dramatically.

At first, ropes of molten glass were coiled into shapes and fused together. By 1200 B.C.,

glass was pressed into moulds to make cups and bowls. When the blowpipe was invented by

the Phoenicians in 3000 B.C., it not only speeded production but allowed for round

containers. Colours were available from the beginning, but clear, transparent glass was not

discovered until the start of the Christian era. During the next 1000 years, the process spread

steadily, but slowly, across Europe.

The split mould, which was developed in the 17th and 18th centuries, further provided for

irregular shapes and raised decorations. The identification of the maker and the product

name could then be moulded into the glass container as it was manufactured.

9

As techniques were further refined in the 18th and 19thcenturies, prices of glass containers

continued to decrease. Owens invented the first automatic rotary bottle-making machine,

patented in1889. Suddenly, glass containers of all shapes and sizes became economically

attractive for consumer products, and from the early 1900s until the late1960s glass

containers dominated the market for liquid products. A typical modern bottle-making

machine automatically produces 20,000 bottles per day.

While other packaging products, such as metals and plastics, were gaining popularity in the

1970s, packaging in glass tended to be reserved for high value products. As a type of "rigid

packaging," glass has many uses today. High weight, fragility and cost have reduced the

glass markets in favour of metal and plastic containers. Still, for products that have a high

quality image and a desire for high flavour or aroma protection, glass is an effective

packaging material. The packaging glass used today is the only type of glass accepted in US

recycling programs.

Metals: Ancient boxes and cups, made from silver and gold, were much too valuable for common

use. Metal did not become a common packaging material until other metals, stronger alloys,

thinner gauges and coatings were eventually developed. One of the "new metals' that

allowed metal to bemused in packaging was tin. Tin is a corrosion-resistant metal, and

10

ounce-for-ounce, its value is comparable to silver. However, tin can be "plated" in very thin

layers over cheaper metals, and this process made it economical for containers. The process

of tin plating was discovered in Bohemia in 1200 A.D., and cans of iron coated within were

known in Bavaria as early as the 14th century. After William Underwood transferred the

process to the United States via Boston, steel replaced iron, which improved both output and

quality.

The term 'tin can' referred to a tin-plated iron or steel can and was considered a cheap item.

Tin foil also was made long before aluminum foil. Today many still refer to metal cans as

'tin cans' and aluminum foil as 'tin foil', a carryover from times well past. In 1764, London

tobacconists began selling snuffing metal canisters, another type of today's "rigid

packaging." But no one was willing to use metal for food since it was considered poisonous.

The safe preservation of foods in metal Containers were finally realized in France in the

early1800s. In 1809, General Napoleon Bonaparte offered 12, 000 francs to anyone who

could preserve food for his army. Nicholas Appert, a Parisian chef and confectioner, found

that food sealed in tin containers and sterilized by boiling could be preserved for long

periods. A year later (1810), Peter Durand of Britain received a patent for tinplate after

devising the sealed cylindrical can. Since food was now safe within metal packaging, other

products were made available in metal boxes. In the 1830s, cookies and matches were sold

in tins and by 1866 the first printed metal boxes were made in the United States for cakes of

Dr. Lyon's toothpowder.

11

The first cans produced were lead-soldered by hand, leaving a 1 1/2-inch hole in the top to

force in the food. A patch was then soldered in place but a small air hole remained during

the cooking process. Another small drop of solder then closed the air hole. At this rate, only

60cans per day could be manufactured. In 1868, interior enamels for cans were developed

but double seam closures using a sealing compound were not available until

1888.Aluminum particles were first extracted from bauxite ore in 1825 at the high price of

$545 per pound.

When the development of better processes began in 1852, the prices steadily declined until

1942, when the price of a pound of aluminum was $14.Although commercial foils entered

the market in1910, the first aluminum foil containers were designed in the early 1950s while

the aluminum can appeared in 1959.

Plastics: Plastic is the newest packaging material in comparison with metal, glass, and paper.

Although discovered in the 19th century, most plastics were reserved for military and

wartime use.

Plastics have become very important materials and a wide variety of plastics have been

developed over the past 170years. Several plastics were discovered in the nineteenth

century: styrene in 1831, vinyl chloride in 1835, and celluloid in the late 1860s.

However, none of these materials became practical for packaging until the twentieth century.

Styrene was first distilled from a balsam tree in 1831, but the early products were brittle and

shattered easily. Germany refined the process in 1933 and by the 1950s Styrofoam was

available worldwide. Insulation and cushioning materials as well as foam boxes, cups and

meat trays for the food industry became popular.

Vinyl chloride, discovered in 1835, provided for the further development of rubber

chemistry. For packaging, molded deodorant squeeze bottles were introduced in 1947 and in

1958; heat shrinkable films were developed from blending styrene with synthetic rubber.

Today some water and vegetable oil containers are made from vinyl chloride. Celluloid was

12

invented during the American Civil War. Due to a shortage of ivory, a United States

manufacturer of billiard balls offered a $10,000 Reward for an ivory substitute.

A New York engineer, John Wesley Hyatt, with his brother Isaiah Smith Hyatt,

experimented several years before creating the new material. Patented in 1870, "celluloid"

could not be molded, but rather carved and shaped, just like ivory. Cellulose acetate was

first derived from wood pulp in 1900 and developed for photographic uses in1909. Although

DuPont manufactured cellophane in New York in 1924, it wasn't commercially used for

packaging until the late 1950s and early 1960s.

A Review: From containers provided by nature to the use of complex materials and processes,

packaging has certainly changed. Various factors contributed to this growth: the needs and

concerns of people, competition in the marketplace, unusual events (such as wars), shifting

lifestyles, as well as discoveries and inventions. Just as no single cause influenced past

development, a variety of forces will be required to create the packages of the future, but a

very important factor will always be consumer choice. Ultimately, only the packaging that

our society demands is produced. We choose by the products we purchase.

Current packaging designs are beginning to incorporate recyclable and recycled plastics but

the search for reuse functions continues.

13

3. PACKAGING INDUSTRY

History:

In pre industrial society, packaging of food was far from being unknown. It was used for food storage at home and for transport from the production place, the farm, or workshop to

the local or regional market. Examples are the transport of cereals or flour in bags, tea in

wooden boxes or tinplate canisters, and oils in jars. At the household level, people salted

meat and pickled vegetables and preserved them in jars. In groceries at the end of the

nineteenth century, most commodities were still unpacked and sold in bulk. Products such as

tea, coffee, sugar, flour, or dried fruits were weighed out in front of the customer and

wrapped in paper or put into a bag. In major cities in the 1880s, the milkman came around

with a dipper and can to deliver milk, which was often dirty.

Origin of Modern Packaging and Canning:

Early methods of sealing jars included waxed paper, leather, or skin, followed by cork

stoppers and wax sealers. The beginning of modern food technology started with the

experiments of the French confectioner Nicolas Appert (17501841). In 1795, the French

government offered a prize of 12,000 francs to anyone who could find a way to preserve

food because Napoleon Bonaparte needed to provide the military with a safe food supply.

(The requirements of providing adequate food supplies for armies and navies have been of

great significance in the history of modern packaging and food preservation.) After fourteen

years of experimentation, Appert developed a method for preserving foods by heating.

The food, meat, or vegetables, was first cooked in open kettles and placed in glass jars. After

removing as much air as possible, the jars were carefully sealed with corks wired in place

and then submersed in boiling water.

14

Appert chose glass for the container because he believed that it was air that caused the

spoilage, glass is a material least penetrated by air. It is of importance to note that, in

Appert's time, it was not known that microorganisms caused food to spoil.

The processes involved in food spoilage were not understood until the second half of the

nineteenth century as a result of the work of scientists such as Louis Pasteur (18221895) on

microorganisms (Thorne, 1986).

In 1810 Appert published his prize-winning essay on food preservation and the French

emperor Napoleon awarded the 12,000-franc prize to him. Within a year, an English version

appeared in London, and the new method of preserving food in glass spread quickly to other

countries.

Canning: Two individuals in England are given credit for applying and improving Appert's invention,

Bryan Donkin and Peter Durand. Bryan Donkin, an associate of John Hall's at his Dartford

Iron Works, realized in 1811 that iron containers could be used instead of the fragile glass,

and in 1812 the factory began to produce canned food such as meat. In 1810, Peter Durand

patented the use of metal containers, which were easier to make and harder to break than

glass jars. (The glass jars used by Appert frequently broke.) He covered iron cans, which

were prone to rust, with a thin plating of tin (which is not adversely affected by water), and

invented the "tin can." By 1813, Durand was selling canned meat to the Royal Navy. The

British admiralty bought these foods as part of the medical stores for distribution to sick men

as well as to supply expeditions.

By 1819 canning had arrived in the United States, but no one wanted canned food until the

Civil War started. In 1821, the William Underwood Company in Boston introduced

commercial canning in the United States. For a long time, people regarded canned foods

with suspicion, and for good reasons. In the middle of the nineteenth century, the foods

produced by the canning industry were as likely to spoil as not because of inadequate

heating techniques (Morris, 1958). Then, beginning in 1868, first in the United States and

15

later in Europe, handmade cans were replaced by machine-cut types. The new technology

made it possible for giant meat-canning firms like P. D. Armour to emerge in Chicago and

Cincinnati. The product, however, was packed in big, thick, clumsy red cans and was not

very appetizing.

The American Gail Borden was a pioneer in food canning. In 1856, he successfully

produced sweetened condensed milk in cans and was granted a patent on the process. With

financial support, the New York Condensed Milk Company was established in 1857.

The demand for condensed milk was at first limited, but during the American Civil War

(18611865) it was introduced on a large scale. The Civil War contributed significantly to

the popularization of canned foods in general (Clark, 1977). The army had to be fed and the

government contracted with firms to supply food. Under difficult circumstances, people

learned that canned foods such as condensed milk can be tasty and nourishing. The

invention of practical can openers at the end of the nineteenth century made cans easier to

open, making them even more convenient for consumers.

For many years, however, the flavour of most canned food left much to be desired. On the

other hand, it should be realized that products such as canned peas and salmon were usually

sold to people living on the American prairies or in the urban slums in Great Britain, most of

whom had never eaten the fresh product. In addition, losses due to spoilage caused by

microorganisms remained high. It was not until the end of the nineteenth century that

research carried out at Massachusetts Institute of Technology made a substantial

contribution to improving the keeping quality, nutritional value, and taste of food products

preserved in cans and glass.

In the early twentieth century, the heavy cans were replaced by those made of lighter

materials, and manufacturers could stress that their products were hygienically processed

and, therefore, safer to eat than the traditionally unpackaged products that had been sold in

bulk. As food technology advanced, numerous chemical additives were developed to control

or speed up food processing and to increase the keeping quality of canned foods.

16

Originally, the nutritional value of food preserved by canning was not high, mainly due to

the length of time required by the heating techniques. From the 1920s onward, however, the

nutritional value of canned foods gradually approached that of the fresh product, thanks to

modern food technology.

Finally, in the 1960s, Reynolds and Alcoa companies succeeded in making all-aluminum

cans out of one piece of metal, thereby solving the problem of the weight of the cans; only

the lid needed to be attached (Clark, 1977). At the same time, the invention of the rip-off

closure and the pop-top lid on aluminium cans made them even more convenient, and made

can openers unnecessary. For consumers, the choice between fresh or canned food became

largely a question of taste, convenience, and preference.

Overview:

The global packaging industry is approximately a $433 billion market. The domestic

packaging market, which is the major focus of this report, represents approximately 29%, or

$124 billion of the global market. The industry consists of four general segments classified

by material type: paper and board, plastics, glass and metal. The largest segments of the

industry are paper and board and plastics, which account for 36% and 35%, respectively, of

the global packaging market.

The packaging industry is a large, fragmented market with thousands of competitors. While

packaging companies serve a variety of markets, the largest end markets for packaging

products are food and beverage. Food packaging accounts for approximately 40% ($175

billion) of all packaging applications. Beverages represent approximately 18% or $80 billion.

These end markets are stable, non-cyclical, steadily growing markets that are consequently

attractive, regardless of the economic climate.

The growth rate of the packaging industry is primarily driven by growth rates and market

trends within various end markets. Growth rates vary from a low of 3.2% for beverages to a

17

high of approximately 5% for health care products. The largest end market, food, has

historically grown at slightly less than 4% annually. It should be noted that sub segments of

an end market may grow at higher rates than the end market itself. For example, while the

beverage market has generally been a low growth market, the bottled water sub segment of

the beverage market has recently achieved very strong growth.

With liberalized trade and economic policy, The Nation has achieved a higher rate of growth

and accelerated the reform revolution. Advance estimate for GDP growth for 2005-06

expects the economy to grow by

8.1 %. Manufacturing Sector is said to grow at 9.4% in 2005-06 compared to 8.1 % in 2004-

05. Agricultural Sector is projected to expand at 2.5 % in 2005-06 compared to 0.3% growth

in 2004-05. Due to FDI in retail sectors, the Retail Sector in India is expected to grow by

20 % in the next 10 years. These developments will give a boost to all the sectors,

Packaging Industry in particulars and open up tremendous opportunities in the packaging

Industry.

Indian Packaging Scenario:

Indian Packaging Industry is worth ` 2,00,000 crores with growth rate varying from

5% in some sectors to as much as 20% in Sectors like Flexible Packaging, compared to

3% in developed countries.

Most of the basic raw materials needed for Packaging Industry such as Paper, Board, Plastic, Glass, Metal and others are available in abundance.

Packaging Machinery Sector involved in making Packaging Converting Machines, Product Packaging Machines and allied equipments have adopted modern technology

are exporting the machines even to developed economies of the world.

18

Over 40% of Export is done by small and medium Sector Industries where Packaging Industry has its major presence.

A number of State of Art Package Converting and Manufacturing plants have been set up in the country; some of them are exporting to developed countries.

Major Players:

1. In Flexible Packaging:

Overview:

Consists of typically multi-layered laminated sheets or a combination of various

subtracts such as polymers, aluminium fibres and paper.

Market around ` 2,000 crores (US $ 465 mn.)

Laminated sheets are generally a combination of polyester films, BOPP, Polyethylene, etc. Others - metallic packaging, co-extruded fibres, lamination.

BOPP and polyester film are major raw materials - account for 60% of the raw materials cost.

Industry:

There are over 150 manufacturers in the sector.

There are nearly 100-150 manufacturers in the small scale industry with capacities < 250 tonnes per annum and 10-15 players with capacities over 1000 tonnes per annum.

19

Major players - Paper Products, Akar Group (Akar Laminates, Sharp Industries, Vishnu Vijay Packers, Orient Press, India Foils, Flex Industries, RT Packaging,

Mukund Flex Pack, etc.

Players categorised as class A, B & C. Class A caters to premium brands of MNCs and large companies. Class B caters to lesser known brands - cost conscious segments.

Import duty : Basic - 35%; Surcharge - 10%; Countervailing Duty (CVD) - 16% and Special Additional Duty (SAD) - 4%

Usage:

Flexible packaging is primarily used in the packaging of food and beverages.

Food sector alone consumes two third of laminates produced in the country.

Personal products such as hair care products, pan masala, tea, coffee and industrial products account for the balance.

20

2. In Films:

BOPP films first used in 1960 in the packaging industry.

Polypropylene is the basic raw material for BOPP films.

Many manufacturers depend on imports to meet raw material requirement.

Market around ` 400 crores (US $ 90 mn.)

Indias share of the world market of 2 mntpa (million tonnes per annum) is very low < 5%

Share of BOPP improving over competitive materials such as PET and Cellophane.

BOPP may substitute polyester films as it is cheaper to PF, however converters need to upgrade their technology.

Players:

Segment dominated by Cosmo Film (14500 T) and Gujarat Propak (11500 T).

Others - Sharp Industries, Max India, Supreme Oriented Films, MM Rubber Co., Hindustan Adhesives, etc.

21

3. Polyester Films:

Industry:

Market around ` 850 crores (US $ 195 mn.)

First segment to enter packaging.

Initially polyester films were imported.

Now packaging polyester films are made from polyester films which are in turn made from Dimethylterepathalate (DMT), Purified Terapthalic Acid (PTA) or Monoethylene

Glycol (MEG).

Players: Garware Polyester was the first to set-up a unit in 1981.

Major players in this sector are Garware Polyester, Polyplex Corporation, Ester Industries, Venlon Polyester, Siltap Chemicals, Jindal Polyester, Jalpac India, Amco

Vinyl, etc.

4. In Laminate Tubes:

Industry: Market around ` 750 crs. (US $ 175 mn.) Tubes are of two types - laminate tube and seamless tube. Laminate tube comprises of 5 layer printed laminate where as a seamless tube body

comprises mono or multi layered extruded. Seamless tubes (no seam in the tube) was first introduced in 1996.

22

Properties of these tubes can be varied by using a variety of polymers. Popularly used in cosmetic, dentrifice, pharmaceuticals, etc.

Usage: Major applications. Seamless - cosmetics, pharmaceuticals, processed food, industrial products, etc. Laminate - Cosmetics, pharmaceuticals, processed food, adhesives, industrial greases,

chewing gums, etc. Players: Sector dominated by Essel Packaging.

Others - Paper Products; Akar Laminates.

23

4. TYPES OF PACKAGING Protecting goods is very important. Food, electronics, clothes, furniture and other consumer

goods all come in packaging meant to protect them during transportation and storage. There

are different types of packaging solutions and materials. Packaging can be standard or

custom made, for instance.

Paper and Carton Packaging:

Paper and carton packaging is used for different types of goods (food, electronics, toys,

shoes, kitchenware and even other packaging materials). Paper and carton packaging

companies produce wrapping paper, inflated paper, sheets, boxes, tubes, pallets,

interlayers, corners, edges and custom protective systems (depending on the dimension

and shape of the packed good, the carton is cut and modelled to fix and protect the

product). Paper can be used to laminate other materials in order to make them stronger.

There is also anticorrosive paper that can be used to wrap goods or to laminate other

materials.

Film Packaging: There are multiple types of films used in the packaging industry, most commonly

polyethylene (PE), polypropylene (PP), polyolefin and polyvinyl chloride (PVC) films.

The films usually come on a roll and are used to wrap goods, cover goods, protect boxes

and make other packaging products (such as bags, tubes, bubble wrap and sheets). Films

24

can be used for lamination, printed or perforated. They can be anticorrosive, antistatic,

shrinkable or non shrinkable, and slippery or non slippery.

Foam Packaging:

Foam used for packaging can be produced on a roll or in sheets of different thicknesses.

The foam is used to wrap goods or make bags (usually laminated with high-density PE),

corners, edges and custom systems. The corners and edges are used to protect flat glass,

furniture and sharp edges. Foam can be cut and modelled on the product's shape to fix

and protect it. It can be antistatic and has good insulation properties.

Textile Packaging:

There are some goods that are best protected by textiles. For example, there are custom-

made textile insertions used in the automotive industry to protect car parts during

25

transportation. The textile insert is put on a metal frame that fits into a metal container.

There is also textile material used for box covers.

Plastic Boxes and Containers:

Multiple types of plastic boxes and containers are used in all industries. For example, in

the food industry there are plastic containers for goods like ketchup, yogurt, milk and

juices. Plastic boxes are mainly used for transporting goods and are reusable. They can

be stacked, folded when empty to save storage space and recycled.

Packaging Systems:

Packaging companies offer different types of systems that can be divided into two

categories: special solutions and packaging machines. The special solutions are used for

valuable products that don't have a regular, simple shape. For example, parts of

airplanes or expensive decorative glass objects need special solutions to be packed. The

goods fit perfectly into the packaging and are protected against damages. Packaging

26

machines are used for wrapping (wrapping the stretch film on the pallet), strapping

(applying and sealing straps on boxes), sealing (with tape for boxes and with heat for

films) and shrink wrapping (applying PVC or polyolefin film on products or boxes).

There are also machines that inflate film, paper and instant foam.

Other Types:

Adhesive tapes are also considered packaging materials, as they help seal boxes. They

are usually made out of PE or PP film that has acrylic or solvent glue applied to it and

that can be printed on. Strapping tapes are usually applied on boxes or pallets. They are

made out of PE or PP and can be printed with one color. The standard colors are black

and clear for PP and green for PE.

27

5. FUNCTIONS OF PACKAGING

The basic functions of packaging is to protect, distribute, inform, attract and sell. The choice

of material is crucial. Durability, weight, formability, colour, texture, touch and feel, costs,

filling line requirements, source reduction and other ecological aspects. In primary

packaging, glass and plastic are the predominant options but not the only ones. For example,

paperboard cartons with carefully tailored barrier properties could be just the solution; if

needed, the package can even be made airtight.

In secondary packaging, paperboard carton is the clear winner with superb performance

across all packaging functions. The heart of the matter, however, is not the material, but how

to use it.

Billions of pounds are spent on packaging food and other items each year. Sixty percent of

all packaging is for food products. At the beginning of the 20th century most food was sold

loose. It was weighed and measured out and placed in bags or directly into the shoppers bag

to carry home. Packaging and advertising were virtually unknown. Today packaging is a

massive, lucrative industry and often it is the way the packaging looks that persuades the

shopper to buy the product inside it.

Functions: Protective Function:

The protective function of packaging essentially involves protecting the contents from

the environment and vice versa. The inward protective function is intended to ensure

full retention of the utility value of the packaged goods. The packaging is thus intended

to protect the goods from loss, damage and theft.

In addition, packaging must also reliably be able to withstand the many different static

and dynamic forces to which it is subjected during transport, handling and storage

operations. The goods frequently also require protection from climatic conditions, such

28

as temperature, humidity, precipitation and solar radiation, which may require "inward

packaging measures" in addition to any "outward packaging measures".

The outward protection provided by the packaging must prevent any environmental

degradation by the goods. This requirement is of particular significance in the transport

of hazardous materials, with protection of human beings of primary importance. The

packaging must furthermore as far as possible prevent any contamination, damage or

other negative impact upon the environment and other goods.

The inward and outward protective function primarily places demands upon the

strength, resistance and leak proof properties of transport packaging.

Sales Function:

The purpose of the sales function of a package is to enable or promote the sales process

and to make it more efficient. It is rightly said that packaging works as silent salesman.

It catches the attention of customers, who pick up the product, go through its description

and are induced to purchase the product. Self service is becoming more and more

common in the field of shopping, where the customer picks up the product himself and

makes its payment on the counter. Packaging in these circumstances promotes the sales.

Promotion Function:

Promotional material placed on the packaging is intended to attract the potential purchaser's attention and to have a positive impact upon the purchasing decision. Promotional material on packaging plays a particularly important role on sales packaging as it is directly addressed to the consumer. This function is of subordinate significance in transport packaging. While product awareness is indeed generated along the transport chain, excessive promotion also increases the risk of theft.

29

Service Function:

The various items of information printed on packaging provide the consumer with

details about the contents and use of the particular product. Examples are the nutritional

details on yogurt pots or dosage information on medicines.The package may also

perform a further function once the contents have been used (e.g. storage container,

toy).

Guarantee Function:

By supplying an undamaged and unblemished package, the manufacturer guarantees

that the details on the packaging correspond to the contents. The packaging is therefore

the basis for branded goods, consumer protection and product liability. There are

legislative requirements which demand that goods be clearly marked with details

indicating their nature, composition, weight, and quantity and storage life.

30

6. PACKAGING AND MARKETING Thousands of new products are introduced every year, more than 15,000 to be exact. How

can a product compete, not only with established brands but with the plethora of new

products that are being introduced? The answer of course is THE PACKAGING. The right

packaging with the right message will rise above the competitive landscape. But very few

companies understand the value behind packaging as a marketing tool. Most just look at as a

way to convey the product or recycle tired images and product packaging that doesn't work.

Understanding the complexities of how a package reaches out to a consumer is one of the

most important things to understand. Communicating that message on product packaging is

a time consuming and difficult challenge. The answer derives from understanding what the

consumer wants from their product packaging.

What compels us to look at a new product? What drew us to pick it up and take a closer

look? Our answer may be different from that of another member of our family or a

significant other but the message is the same. We were intrigued enough by whatever that

made us pick up the product and take a closer look. That's half the battle won because a

product will never sell if someone doesn't pick it up in the first place.

It's a trite saying by now but seriously "think outside the box." That is what makes a product

unique from its competitors. Here are a few questions to ask yourself about your package.

Remember think from the consumers' perspective not from the manufacturers.

Rank these attributes for our product and then the nearest competitive product or a product

that we recently purchased that was outside our normal buying pattern.

Is it new and innovative? Is it fulfilling a need? Is it easy to use and convenient?

31

Is it a good value? Does it make the consumer happy? Does it inspire consumer trust and loyalty? Is it safe and secure? Does it compel you to want to know more? So how does your product stack up in solving a consumer want or need? Would your package make someone desire to take a closer look?

Remember it's the package talking here. It's the one doing the work marketing what's inside

to the customer. That's what we need to drill in our brain about our package.

Evaluating or developing product packaging with the consumer in mind is the first step in

creating a package that markets all the products attributes to the ultimate decision maker, the

customer.The "consumer connection" is what we try to create. Of course the more needs we

can fulfil the better "connection" to the consumer. So think outside the typical behaviour and

solve the hidden need that will make a consumer buy our product and not competitors.

Branding and packaging are two of the most important components of marketing. Branding

is a term used to describe the name, description and design of a product. Branding

differentiates a company's product from their competition. Packing is a marketing tool used

to reflect the brand. A company uses packaging to sell the product inside. The colours, fonts,

descriptions and logo are designed to drive consumers to buy the product.

Sales: The entire focus of a marketing department is to strategize methods to sell the company's

products. Branding and packaging are two of the most effective ways to do this. Once a

brand has been determined, methods are employed to sell the product. Advertising, the

company website and product packaging must all present a cohesive brand or image. In

successful brand campaigns, customers recognize the company's product packaging and

purchase in part because they identify with the brand.

32

Branding: When a company brands a product, they determine its "personality." Creating a brand that is

instantly recognizable and perceived positively is the ultimate goal. Branding integrates

components such as colour, style and visual imagery to distinguish a company's products

from the competition. Developing logos, slogans and tag lines are all ways that marketers

communicate a specific brand.

Slogans: One of the most effective methods of branding is the use of slogans. Companies often

identify a specific characteristic that sets their product apart from the competition. The

slogan becomes a key component in all marketing efforts, including packaging. For example,

Nike has effectively marketed both their logo and slogan "Just do it" into an easily

recognized brand.

Packaging: Packing is designed to capture a customer's attention and it can directly effect whether they

buy the product or not. Innovation and creativity come into play when it comes to packaging.

A well-marketed product is packaged in a way that compels the customer to pick it up and

take a closer look, at which point product descriptions and graphics must be clear.

Packaging Tools: Colours, fonts, descriptions and logos are the tools that are used in packaging design.

Companies market their brands by creating a specific "look and feel" to their product's

packaging. A customer must feel comfortable enough with the presentation of the company's

brand to want to purchase the product.

33

Company Image: Branding and packaging are created by a company. While these efforts are used to market

products, they in turn market the company itself. Branding reflects the image that the

company seeks to project. For example, IBM takes on a more conservative, well-established

corporate image while Apple brands itself as a hip and cutting edge company. These images

reflect the market that the company has identified as target customers.

Marketing Role - Brand Identity and Differentiation: As the only part of the marketing communication that the consumer takes home, Packaging

plays a key role in communicating and reinforcing brand values over time. Packaging has

the power to make, but also to break brand relationships.

A key example of the latter, is a case cited by Hofmeyr and Rice, where a change in pack

design contributed towards a drop in a leading beer brands market share by more than 20%

in the space of just one year. Nothing other than the packaging had changed, the product

itself had not changed in any way. The pack change, although not dramatic (the same style

but with lighter colouring) led to a perception that the beers quality had been compromised

and that it was now weaker. This caused many previously loyal consumers to lose faith in

the brand and to move to the brands stronger competitors instead. This is a clear example

of the power of bad packaging. Although a non-favourable advertisement might be quickly

forgotten, poor packaging (if it remains with the brand throughout its usage cycle) provides

a continual reminder of the brands perceived failing. Likewise, favorable packaging can be

a means of continually reinforcing the brands appeal.

34

Also, an example of the worlds largest selling biscuits i.e PARLE-G is that after

launching a new packaging of a high-class biscuit in the name of same brand did not made

huge sales as huge as the original package. This resulted also because of price variation. The

original biscuit was named PARLE-G while the new packaged biscuit named PARLE-G

GOLD. The packaging of both of them is:

35

7. WASTE MANAGEMENT OF MATERIAL USED IN PACKAGING Package development involves considerations for sustainability, environmental

responsibility, and applicable environmental and recycling regulations. It may involve a

lifecycle assessment which considers the material and energy inputs and outputs to the

package, the packaged product (contents), the packaging process, the logistics system, waste

management, etc. It is necessary to know the relevant regulatory requirements for point of

manufacture, sale, and use.

The traditional three Rs of reduce; reuse, and recycle are part of a waste hierarchy which

may be considered in product and package development.

Most favoured option

Least favoured option

36

THE WASTE HIERARCHY 1) Prevention:

Waste prevention is a primary goal. Packaging should be used only where needed.

Proper packaging can also help prevent waste. Packaging plays an important part in

preventing loss or damage to the packaged-product (contents). Usually, the energy

content and material usage of the product being packaged are much greater than that of

the package. A vital function of the package is to protect the product for its intended

use: if the product is damaged or degraded, its entire energy and material content may

be lost.

2) Minimization: The mass and volume of packaging (per unit of contents) can be measured and used as

one of the criteria to minimize during the package design process. Usually reduced

packaging also helps minimize costs. Packaging engineers continue to work toward

reduced packaging.

3) Re-use: The reuse of a package or component for other purposes is encouraged. Returnable

packaging has long been useful (and economically viable) for closed loop logistics

systems. Inspection, cleaning, repair are often needed. Some manufacturers re-use the

packaging of the incoming parts for a product, either as packaging for the outgoing

product or as part of the product itself.

4) Re-cycling: Recycling is the reprocessing of materials (pre- and post-consumer) into new products.

Emphasis is focused on recycling the largest primary components of a package: steel,

aluminum, papers, plastics, etc. Small components can be chosen which are not difficult

to separate and do not contaminate recycling operations.

37

5) Energy Recovery: Waste-to-energy and Refuse-derived fuel in approved facilities are able to make use of

the heat available from the packaging components.

6) Disposal: Incineration and placement in a sanitary landfill are needed for some materials. Certain

states within the US regulate packages for toxic contents, which have the potential to

contaminate emissions and ash from incineration and leach ate from landfill. Packages

should not be littered.

Development of sustainable packaging is an area of considerable interest by

standards organizations, government, consumers, packagers, and retailers

Sustainable packaging is the development and use of packaging which results in improved

sustainability. At the end stage of design it involves increased use of life cycle inventory

(LCI) and life cycle assessment (LCA) to help guide the use of packaging which reduces the

environmental and ecological footprint, but in the very first steps requires a look at the

whole of the supply chain: from basic function, to marketing, and then through to end of life

(LCA) and rebirth. The goals are to improve the long term viability and quality of life for

humans and the longevity of natural ecosystems.

Sustainable packaging must meet the functional and economic needs of the present without

compromising the ability of future generations to meet the functional and economic needs of

the present without compromising the ability of future generations to meet their own needs.

Sustainable packaging is a relatively new addition to the environmental considerations for

packaging. It requires more analysis and documentation to look at the package design,

choice of materials, processing, and life cycle.

38

This is not just the vague "green movement" that many businesses and companies have been

trying to include over the past years. Companies implementing these eco-friendly actions are

reducing their carbon footprint, using more recycled materials, reusing more package

components, etc. They often encourage suppliers, contract packagers, and distributors to do

likewise.

For example, researchers at the Agricultural Research Service are looking into using dairy-

based films as an alternative to petroleum-based packaging. Instead of being made of

synthetic polymers, these dairy-based films would be composed of proteins such as casein

and whey, which are found in milk. The films would be biodegradable and offer better

oxygen barriers than synthetic, chemical-based films. More research must be done to

improve the water barrier quality of the dairy-based film, but advances in sustainable

packaging are actively being pursued.

Environmental marketing claims on packages need to be made (and read) with caution.

Ambiguous titles such as green packaging and environmentally friendly can be confusing

without specific definition. Some regulators, such as the US Federal Trade Commission, are

providing guidance to packagers.

Companies have long been reusing and recycling packaging when economically viable.

Using minimal packaging has also been a common goal to help reduce costs. Recent years

have accelerated these efforts based on social movements, consumer pressure, and

regulation.

39

8. OVERVIEW OF FMCG INDUSTRY The FMCG industry manages consumer packaged goods - production, distribution to

marketing.

The Indian FMCG industry is the fourth largest industrial sector that has stayed recession-

resilient and shown signs of bright future.

The Fast Moving Consumer Goods (FMCG) industry primarily deals with the production,

distribution and marketing of consumer packaged goods, i.e. those categories of products

that are consumed at regular intervals. Examples include food & beverage, personal care,

pharmaceuticals, plastic goods, paper & stationery and household products etc. The industry

is vast and offers a wide range of job opportunities in functions such as sales, supply chain,

finance, marketing, operations, purchasing, human resources, product development and

general management. Global leaders in the FMCG segment are Sara Lee, Nestl, Reckitt

Benckiser, Unilever, Procter & Gamble, Coca-Cola, Carlsberg, Kleenex, General Mills,

Pepsi and Mars etc.

40

Performance: In India, the FMCG industry is the fourth largest sector with a total (organized) market size

of over US$15 billion in 2007, and can be classified under the premium and popular

segments. The premium segment (~25%) caters mostly to the higher/upper middle income

consumers while the price sensitive popular or mass segment (~75%) consists of consumers

belonging mainly to the semi-urban or rural areas that are not, and cannot afford to be, brand

conscious.

The market growth over the past 5 years has been phenomenal, primarily due to consumers

growing disposable income which is directly linked to an increased demand for FMCG

goods and services. Indeed, it is widely acknowledged that the large young population in the

rural and semi-urban regions is driving demand growth, with the continuous rise in their

disposable income, life style, food habits etc. On the supply side, the wide availability of

raw materials, vast agricultural produce, low cost of labour and increased organized retail

have helped the competitiveness of players.

At a time when the economy and other large industrial sectors such as automobiles, aviation

and financial services are reeling from the global slowdown, the consumer goods sector in

India has managed to defy the trend. As very categorically said by the Amway India

Enterprises managing director and chief executive, Mr. William Pinckney, I am not saying

that our company [sector] is recession-proof but it is recession-resilient. This statement on

the whole stands strong for most the leading players in the FMCG sector.

While a price hike and cost-cutting were the first lines of defense in a bid to protect margins,

Indian manufacturers were able to let logic rather than bottom lines dictate measures, with

increased marketing efforts, a well-thought product mix and new launches helping them

emerge unscathed from the turmoil. The prospects going forward also remain promising.

Future Prospects: The only threats to this strong growth trajectory remain the high portion of unorganized

trade, the limited distribution network of new entrants and the pressure on profit margins

due to increasing competition. But these are likely to be of diminished importance as

proportion of organized trade increases and players invest in improving distribution. Going

41

forward, the industry prospects remain attractive, and new graduates can hope to leverage

the training and on-the-job learning at the leading players in various functional roles, across

the Metros as well as the interior heartlands on India.

Scope of the Sector: Hair care, household care, male grooming, female hygiene, and the chocolates and

confectionery categories are estimated to be the fastest growing segments, says an HSBC

report. Though the sector witnessed a slower growth in 2002-2004, it has been able to make

a fine recovery since then.

For example, Hindustan Levers Limited (HLL) has shown a healthy growth in the last

quarter. An estimated double-digit growth over the next few years shows that the good times

are likely to continue.

Growth Prospects: Indian rural FMCG market is something no one can overlook. Increased focus on farm

sector will boost rural incomes, hence providing better growth prospects to the FMCG

companies. Better infrastructure facilities will improve their supply chain.

FMCG sector is also likely to benefit from growing demand in the market. Because of the

low per capita consumption for almost all the products in the country, FMCG companies

have immense possibilities for growth. And if the companies are able to change the mindset

of the consumers, i.e. if they are able to take the consumers to branded products and offer

new generation products, they would be able to generate higher growth in the near future.

Also, increase in the urban population, along with increase in income levels and the

availability of new categories, would help the urban areas maintain their position in terms of

consumption. At present, urban India accounts for 66% of total FMCG consumption, with

rural India accounting for the remaining 34%. However, rural India accounts for more than

40% consumption in major FMCG categories such as personal care, fabric care, and hot

beverages.

42

In urban areas, home and personal care category, including skin care, household care and

feminine hygiene, will keep growing at relatively attractive rates. Within the foods segment,

it is estimated that processed foods, bakery, and dairy are long-term growth categories in

both rural and urban areas.

Indian Competitiveness and Comparison with the World Markets: The following factors make India a competitive player in FMCG sector: 1. Availability of raw materials:

Because of the diverse agro-climatic conditions in India, there is a large raw material base

suitable for food processing industries. India is the largest producer of livestock, milk,

sugarcane, coconut, spices and cashew and is the second largest producer of rice, wheat

and fruits &vegetables. India also produces caustic soda and soda ash, which are required

for the production of soaps and detergents. The availability of these raw materials gives

India the location advantage.

2. Labour cost comparison:

Low cost labour gives India a competitive advantage. India's labour cost is amongst the

lowest in the world, after China & Indonesia. Low labour costs give the advantage of low

cost of production. Many MNC's have established their plants in India to outsource for

domestic and export markets.

3. Presence across value chain:

Indian companies have their presence across the value chain of FMCG sector, right from

the supply of raw materials to packaged goods in the food-processing sector. This brings

India a more cost competitive advantage. For example, Amul supplies milk as well as

dairy products like cheese, butter, etc.

43

9. MARKETING STRATEGIES ADOPTED BY FMCG Marketing strategy is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive. A marketing strategy should be centered on the key concept that customer is the main goal. SWOT Analysis Strategy:

1. Strengths: Low operational costs. Presence of established distribution networks in both urban and rural areas. Presence of well-known brands in FMCG sector.

2. Weaknesses: Lower scope of investing in technology and achieving economies of scale, especially

in small sectors.

Low exports levels.

44

3. Opportunities: Untapped rural market. Rising income levels i.e. increase in purchasing power of consumers. Large domestic market- a population of over one billion. Export potential. High consumer goods spending.

4. Threats: Removal of import restrictions resulting in replacing of domestic brands. Slowdown in rural demand. Tax and regulatory structure.

FMCG marketing Strategy in Rural India:

Barring a few, notable exceptions, rural marketing in India is still about a van campaign, a

badly-made commercial, a few painted walls and the occasional participation in village haats

and melas.But then, "rural" means different things to different people: from 5,00,000 people

for consumer durables, to less than 50,000 for fast-moving consumer goods.Still, it is

heartening to note the increasing awareness of the importance of rural markets - or, at least,

of companies wanting to move beyond urban boundaries.

According to estimates by the Rural Marketing Agencies Association of India, the total

budget for rural marketing is only about ` 500 crores (` 5 billion), compared to the over`

13,000 crores (` 130 billion) allotted to mass media.This is grossly inadequate to cover the

huge potential for different products in rural markets. Of course, clientsreluctance to spend

big money for bigger results in rural markets is because there are no standard performance

yardsticks for judging the efficacy of the rural marketing efforts.The TRPs and NRS/IRS

data help to determine the efficacy of TV and press marketing. But there is no study to tell

what is the ideal cost per contact or What is the ideal number of eyeballs or footfalls for

different rural activities.But only consider the huge successes of some regional brands,

especially in the FMCG sector, which are giving the multinationals a run for their money.

45

Companies like CavinKare (Chik Shampoo, Meera Herbal Powder, Fairever Cream and so

on), Anchor (100 per cent vegetarian toothpaste), Ghadi detergent powder and Power soap

are proof that regional brands can become brands to reckon with. And don't forget Nirma,

the most enduring example of a brand that began as a regional player and is now a giant.

What did these products do that was so different? Most of them identified a segment that

was vacant in terms of product and area of operation. They all started in small, concentrated

markets, appealing to the local ethos and aspirations of the targeted area.Their

communication, be it a simple radio spot or a wall painting or a theatre film, touched a chord

in the target audience. And, most importantly, their policies were flexible and they could

adopt to fast changing marketing situations. What should companies do to step up their

payback from rural marketing efforts? Here are some steps that should help:

46

People power:

Total commitment from top leadership, keeping in mind that rural marketing is a long-term

relationship, is imperative - the successes of Hindustan Unilever and ITC are proof of this

statement. But even more important is the need for a dedicated task force.

Rural marketing efforts need special mindsets, which many of the urban-oriented

management graduates who are at the helm of affairs at most organizations do not possess.A

separate marketing and sales vertical headed by people with passion and commitment to

rural marketing and supported by a field team that can face the rough and tough of the vast

country-side with courage and conviction is a must.The best bet is to recruit students from

specialized institutes such as the Indian Institute of Rural Management, or at least,

management graduates who have studied the subject as an elective.

Know your customers:

A good place to begin is studying the mindset of the customers, so we can create a

customized plan of action. All too often, clients insist their knowledge of their customers

(based on studies of urban India) is enough on which to base an action plan. Our experience

shows that the attitudes, aspirations and fears of rural customers, with regard to products and

brands, are very different from their urban counterparts.

Research can give invaluable ideas for new product development as well as new methods of

reaching the target audience. The refrigerator with standby power for 12 hours, pressure

cookers with two handles and a radio with key-winding mechanism are all the result of

research.

More and more companies turn to the local haats to sell their products. While haats offer

opportunities to target consumers from several villages at one place, and to that extent make

your effort cost-effective, ensure that the people who patronize these haatsare the kind who

will buy the product or brand.

47

Ensure availability: Most anecdotes about rural marketing centre on the distribution aspect - the humongous task

of physically reaching the product to over 6,00,000 villages, most of them without

motorable roads. But it's not really as nightmarish as it is made out to be, at least keeping in

mind the present goals of marketing companies in rural India.

We've all heard about the shampoo sachets that are available in even the smallest villages.

How does that happen? It's a direct result of rising aspirations, fuelled by television

commercials. The consumer demands the product from the local shopkeeper, who then buys

the products from the nearest feeder markets which means if we can ensure distribution to

the feeder markets in towns or villages with populations of 10,000 - 15,000, weve already

taken the first step towards reaching our target customer.

Studies also indicate that rural consumers prefer to shop for durables such as televisions,

automobiles and appliances in the nearest big town or city. So, if our products are in towns

with populations of 50,000, we're closer to the rural consumer than you would have thought.

The Mystery Game: It was a complete Mystery, HUL foxes P&G through successful Ambush Marketing.

48

It was a great outdoor marketing campaign by P&G in Mumbai, and it did get foxed and

frustrated by HUL, but the outcome of the whole melodrama that followed is still uncertain.

There were huge outdoor hoardings, model bus-stops, and full page print ads by P&G to

create excitement over Pantene and its new packaging. Carefully ironed out, or so P&G

envisaged. It was too open to attack, and Dove took the bold step and stepped into the fray.

Kudos to HUL for getting it done within a dayit was more of a done within a month than a

day. Competition intelligence as they call it has definitely come into play here. HUL was

waiting for the bait to get hooked on. But still, a campaign rolled out within a few weeks is

commendable. But did it achieve anything for HUL? Brand connotation with the Mystery

Shampoo is and will always be Pantene; Dove did nothing to change that.

All that HUL visualized was a retort back at P&G through the necessary buzz within

everybodys mind. They achieved the buzz, but inside the marketers head. The consumer

was left lurking during the delivery of the Dove message.(There is no Mystery, Dove is

the No.1 Shampoo)

49

Marketing circles were talking about it for weeks. But the real consumer, the actual user of

the brand & the product didnt see any value in the fracas between HUL and P&G. Sadly,

this event might in the short run; temporarily, end such campaigns, where the consumer is

kept at the edge of his/her seat before the prized message is communicated.

50

10. ROLE OF PACKAGING IN FMCG

The importance of packaging design as a vehicle for communication and branding is

growing in competitive markets for packaged FMCG products. This research utilized a focus

group methodology to understand consumer behaviour towards such products.The challenge

for researchers is to integrate packaging into an effective purchasing decision model, by

understanding Consumers behavior towards the packaging of FMCG products.

When consumers search for and process information in-store, the product's package can

contain relevant and useful information for the consumer. Product packaging forms the end

of the 'promotion-chain' and is close in time to the actual purchase and may therefore play an

important role in predicting consumer outcomes.

Packages also deliver brand identification and label information like usage instructions,

contents, list of ingredients or raw materials, warnings for use and directives for care of

product.

Packaging is the container for a product encompassing the physical appearance of the

container and including the design, colour, shape, labelling and materials used

Packaging has a huge role to play in the positioning of products. Package design shapes

consumer perceptions can be the determining factor in point-of-purchase decisions which

characterize the majority of shopping occasions.In recent years the marketing environment

has become increasingly complex and competitive. A products packaging is something

which all buyers experience and which has strong potential to engage the majority of the

target market. This makes it an extremely powerful and unique tool in the modern marketing

environment.In addition to its benefits in terms of reach, some marketers believe that

packaging is actually more influential than advertising in influencing consumers, as it has a

more direct impact on how they perceive and experience the product.

In most cases, the experience has been that pack designs are more likely to influence

the consumer perception of the brand. For products with low advertising support,

51

packaging takes on an even more significant role as the key vehicle for communicating the

brand positioning.

Fast Moving Consumer Goods (FMCG), also known as Consumer Packaged Goods

(CPG), are products that are sold quickly at relatively low cost. Though the absolute profit

made on FMCG products is relatively small, they generally sell in large quantities, so the

cumulative profit on such products can be large.

Examples of FMCG generally include a wide range of frequently purchased consumer

products such as toiletries, soap, cosmetics, teeth cleaning products, shaving products and

detergents, as well as other non-durables such as glassware, light bulbs, batteries, paper

products and plastic goods. FMCG may also include pharmaceuticals, consumer packaged

food products and drinks.

Some of the best known examples of Fast Moving Consumer Goods companies includes,

General Mills, H. J. Heinz, Reckitt Benckiser, Sara Lee, Nestl, Unilever, Procter &

Gamble, Coca-Cola, Carlsberg, Kleenex, Kraft, Pepsi, Wilkinson and Mars. Unlike

other economy sectors, FMCG share float in a steady manner irrespective of global market

dip, because they generally satisfy rather fundamental - as opposed to luxurious - needs.

52

The Relevance of Packaging as a Marketing Tool:

Never underestimate the importance of packaging. Marketers often measure consumer brand

perceptions and ignore the pack. Yet we know from the way that consumers react to

unbranded products that packaging plays a huge role in reinforcing consumer perceptions.

Packaging helps to drive the way consumers experience a product. Yet, we spend little time

researching the connections between packaging and the direct experience of the product.

What relevance does packaging have in the marketing world of today?

Reaching the target market:

In recent years the marketing environment has become increasingly complex and

competitive. Although advertising can be a highly effective means of communication for

those consumers who are exposed to it, reaching the entire target market for most products is

generally not a feasible prospect.

Media fragmentation has meant that it is becoming increasingly difficult and expensive to

reach and communicate with customers and potential customers, forcing marketers to adopt

more innovative means of reaching their target market.

In contrast to advertising, which has limited reach, a products packaging is something

which all buyers experience and which has strong potential to engage the majority of the

target market. This makes it an extremely powerful and unique tool in the modern marketing

environment. In addition to its benefits in terms of reach, some marketers believe that

packaging is actually more influential than advertising in influencing consumers, as it has a

more direct impact on how they perceive and experience the product.

53

Winning at the First and Second Moment of Truth:

Packagings dual role is what makes it a truly unique marketing tool. Unlike other forms of

communication which tend to be fleeting, packaging plays a crucial role not only at the point

of sale, but also after the actual purchase of the product. The packaging has to provide

consumers with the right cues and clues both at the point of purchase and during usage.

The first moment of truth is about obtaining customers attention and communicating the

benefits of the offer. The second moment of truth is about providing the tools the customer

needs to experience the benefits when using the product.

The Point Of Sale (The 1st Moment Of Truth): The importance of making an impact at the point of sale cannot be underestimated. A recent

Point of Purchase Advertising Institute (POPAI) survey in the UK found that over 70% of

all purchasing decisions are made in-store at the point of purchase. Brand purchases are

being made or broken in the final five seconds.At the point of purchase, packaging serves a

number of key functions, namely:

1. Cutting through the clutter actually getting the consumer to notice/see the

product.

2. Communicating marketing information.

3. Stimulating or creating brand impressions.

4. Providing various brand cues:

Value. Quality. Safety.

Of course, if packaging does not cut through the clutter and catch the consumers attention,

none of packaging do other functions even come into play. The most brilliant and creative

packaging is useless unless it is seen. Creating a powerful shelf presence so that the brand

stands out from the crowd and is actually noticed is the first and most vital step for any

product on a shelf.In our experience, most categories have a mixture of customers with high

and low Involvement levels. Even categories which are traditionally considered high

54

involvement decisions, such as motor vehicles, have people for whom the decision is made

without much consideration and categories which are often considered to have few

involved consumers, such as soap, is an important, deliberated decision and assessed in

depth by some.

Usage (The 2nd Moment of Truth):

Unlike advertising exposure which can be relatively brief, packaging continues to build

brand values during the extended usage of the product and can drive brand equity and

loyalty.

After purchase, packaging plays both a functional and a marketing role.

1. Functional Role: From a functional perspective, packaging is often part of the usage/consumption,

experience not only is a means of providing any necessary information, but it can

also form a part of the actual product and provides functional benefits (e.g. being

easy to use, fitting into storage space, etc.). If packaging is unwieldy it can hamper

the relationship with the brand for instance if it breaks easily, doesnt fit in the

fridge, can cut the consumer, etc., the experience with the product can be negative.

2. Marketing Role - Brand Identity and Differentiation:

As the only part of the marketing communication that the consumer takes home,

Packaging plays a key role in communicating and reinforcing brand values over time.

Packaging has the power to make, but also to break brand relationships.

A key example of the latter, is a case cited by Hofmeyr and Rice, where a change in

pack design contributed towards a drop in a leading beer brands market share by more

than 20% in the space of just one year. Nothing other than the packaging had changed

the product itself had not changed in any way. The pack change, although not dramatic

(the same style but with lighter colouring) led to a perception that the beers quality had

been compromised and that it was now weaker.

55

This caused many previously loyal consumers to lose faith in the brand and to move to

the brands stronger competitors instead. This is a clear example of the power of bad

packaging. Although a non-favourable advertisement might be quickly forgotten, poor

packaging provides a continual reminder of the brands perceived failing. Likewise,

favourable packaging can be a means of continually reinforcing the brands appeal.

56

11. FACTORS INFLUENCING PACKAGING DECISIONS

Packaging decisions are important for several reasons including:

Protection: Packaging is used to protect the product from damage during shipping and handling,

and to lessen spoilage if the protect is exposed to air or other elements.

Visibility: Packaging design is used to capture customers attention as they are shopping or

glancing through a catalog or website. This is particularly important for customers who

are not familiar with the product and in situations, such as those found in grocery stores,

where a product must stand out among thousands of other products. Packaging designs

that standout are more likely to be remembered on future shopping trips.

Added Value: Packaging design and structure can add value to a product. For instance, benefits can be

obtained from package structures that make the product easier to use while stylistic

designs can make the product more attractive to display in the customers home.

Distributor Acceptance : Packaging decisions must not only be accepted by the final customer, they may also

have to be accepted by distributors who sell the product for the supplier. For instance, a

retailer may not accept packages unless they conform to requirements they have for

storing products on their shelves.

Cost : Packaging can represent a significant portion of a products selling price. For example,

it is estimated that in the cosmetics industry the packaging cost of some products may

57

be as high as 40% of a products selling price. Smart packaging decisions can help

reduce costs and possibly lead to higher profits.

Expensive to Create: Developing new packaging can be extremely expensive. The costs involved in creating

new packaging include: graphic and structural design, production, customer testing,

possible destruction of leftover old packaging, and possible advertising to inform

customer of the new packaging.

Long Term Decision: When companies create a new package it is most often with the intention of having the

design on the market for an extended period of time. In fact, changing a products

packaging too frequently can have negative effects since customers become conditioned

to locate the product based on its package and may be confused if the design is altered.

Environmental or Legal Issues: Packaging decisions must also include an assessment of its environmental impact

especially for products with packages that are frequently discarded. Packages that are

not easily bio-degradable could draw customer and possibly governmental concern.

Also, caution must be exercised in order to create packages that do not infringe on

intellectual property, such as copyrights, trademarks or patents, held by others.

58

12. PACKAGING EXPENDITURE

Packaging today provides the basis for many forms of shelf-life extension, essential for

modern retailing. However, packaging is often criticized on the grounds of cost and of being

a waste of natural resources and energy. Packaging is necessary to protect the product from

spoilage and to maintain public health and that the packaging industry, just like any other

industry, cannot exist without raw materials and energy.

The total value of the UK packaging industry is 4,000 million per annum (approx 2,600

million for foods). However the total energy involved is only about 5% of the national

energy consumption. The food packaging industry has always been anxious to conserve

resources due to economic pressures. This has been achieved by using less packaging

material, or by turning to cheaper, more abundant materials. In addition, recycling and

package reuse/refilling schemes have been introduced voluntarily to save materials and

energy and to protect the environment.

A sharp surge in packaging costs is tormenting consumer product marketers, squeezing their

margins and forcing them to consider increasing prices of processed food and some other

products in a cut-throat market. Prices of packaging materials such as aluminium foil, Kraft

paper, and adhesives for corrugated boxes and packaging plastics have increased up to 25%

in the last five months, forcing companies such as Marico and Dabur to talk price hike in a

marketplace where increasing prices and cutting advertising spends could prove fatal.

FMCG companies, working with extremely low margins after absorbing most of last years

rise in raw material prices and higher logistics costs due to fuel price hike, are also exploring

innovation in packaging and hedging materials to retain profitability.In the current scenario

FMCG companies will exercise options like trimming internal costs, hedging in the

packaging materials or cut down advertising & promotional expenses for a quarter if they

are not launching any new products. A Dabur India official said while the company has

absorbed higher packaging costs so far, it may increase prices in some categories if costs

rise further.

59

Companies are also exploring innovation in packaging. Shyam Sunder, senior design

manager at IDE (Innovation Design Engineering) division of Tata ELXSI, said many FMCG

companies now demand for smarter and cost-efficient packaging solutions. Packaging costs

typically account of 8-10% of the total costs in a FMCG company. According to Maricos

Gupta, rising material prices have increased packaging costs about 7-8 % year-on-year. This

will rise if the administered fuel prices policy is scrapped, he added. The government is

reported to be working to end fuel subsidies let market forces decide the pricing. The prices

of corrugated boxes have increased 25-30% in last quarter because of low availability of

Kraft paper. An HUL official said the firms bottom line has been dented due to mounting

costs, branding expenses and the demanding nature of consumers. Thats the story of every

FMCG company.

60

13. PACKAGING AS A MEDIUM TO INCREASE SALES

Catching consumers attention is the first step in making the sale

Packaging plays an important role as a medium in the marketing mix, in promotion

campaigns, as a pricing criterion, in defining the character of new products, as a setter of

trends and as an instrument to create brand identity and self impact in all product groups.

The findings of many other research projects are supplemented by the survey carried out by

IRI (Information Resources Inc.), which provides information about this subject from

extensive, in-depth interviews and POS polls, specifically including the issue o